- Hundreds of food products will see their price drop from July under a commitment made to Bercy by 75 major agri-food manufacturers, promised Bruno Le Maire Friday.
- Among the products concerned, Bruno Le Maire mentioned pasta, poultry, cereals, oils and animal feed.
- Can this decline be sustainable? Why did we have to wait until July? How will the commitment of industrialists be monitored? Elements of answers with Philippe Waechter, director of economic research at Ostrum Asset Management, contacted by 20 Minutes.
Finally some air for consumers. Bruno Le Maire announced Friday morning an agreement with 75 major food manufacturers who are committed to lowering the prices of a hundred food products. A decline that will be effective from July and could be part of time, according to Philippe Waechter, director of economic research at Ostrum Asset Management, contacted by 20 Minutes.
What to expect for consumers?
Among the hundred products that will cost less to the passenger at the checkout, Bruno Le Maire cited pasta, poultry, cereals, oils or animal feed, namely those whose "prices on the wholesale markets fall". The precise list will be sent to him "next week". However, milk, beef or pork are already excluded.
There may, however, be emulation between different competitors to extend the decline to more products over time. "If a brand lowers its prices, competitors will be forced to do the same, there can be a fairly strong competitive mechanism and we can expect a big change," says Philippe Waechter.
A decrease that should also be long-term to return to pre-Ukrainian crisis rates. This is for example what is happening in Germany where the price of butter has collapsed by 30% since December, as reported by the Financial Times.
Why did you wait until July?
Consumer price inflation slowed to 5.1% year-on-year in May, but food prices rose to 14.1%. Prices have been soaring in supermarket baskets for many months. This is due to the fact that food prices "have risen on two essential elements: cereals and everything related to fertilizers," explains Philippe Waechter.
Since then, "prices have been absorbed, we are far from the peaks of last year but the time that deliveries are made, that contracts are modified, it takes time necessarily, he develops. Looking at market prices, you can't go down immediately. This is also the explanation given by the Minister of the Economy according to which, "when wholesale prices fall, [...] it sometimes takes three months, four months, five months before the price of the products concerned [...] also falls. Several major food manufacturers have committed to reopening trade negotiations with supermarkets on contracts concluded for 2023, according to the minister.
In addition, "for a very long time, no manufacturer or distributor wanted to take the bet that prices would fall because there were too many uncertainties, now they are less cautious," adds Philippe Waechter.
Why is this agreement decisive?
Without the agreement found by Bercy, Philippe Waechter is formal: the decline would have taken much longer. With these negotiations, the Ministry of Economy has created a "break" in "the idea of safeguarding the consumer so that he can spend the summer in the best conditions," says the director of economic research.
And in order to ensure that manufacturers respect their commitment, the State will "verify" and "sanction those who do not play the game" via controls of the repression of fraud (DGCCRF), warned Bruno Le Maire. He also threatened to reveal the names of distributors who would not comply with the agreement, which "encourages them to commit," says Philippe Waechter. The minister also brandished the threat of "a tax on the excessive margins of these companies", the rate of which would be set by Parliament.
The next objective to continue to help consumers will be to try to "calibrate the price of gasoline on the price of oil," warns the director of economic research. A more complex issue because, unlike the food industry, "distributors are very powerful and there is less competition," he concludes.
- Bruno Le Maire
- Minister of the Economy